Ireland’s living standards have improved considerably over the past decade. Driven largely by multinational enterprises, per capita income and labour productivity have surged to among the highest in the OECD, although domestic firms have remained far less productive. Robust population growth, supported by net migration inflows, plus rising participation rates among women and seniors, have pushed up employment rates. Private domestic investment has been volatile in the multinational sector and subdued overall lately.

Improving access to childcare and reducing tax disincentives for second earners are key to further increasing participation rates and lowering the high share of women on part-time contracts. A more diversified revenue structure would increase resilience to shocks while providing more stable funding for productivity-enhancing long-term investments. Ensuring that physical and digital infrastructure networks meet the quality standards required by an innovation-oriented economy is paramount to preserving Ireland’s attractiveness to foreign investors.

Projected to expand by 10.2% in 2025, driven by front-loaded pharmaceutical exports ahead of US tariffs, real GDP growth will slow to 2.1% in 2026, reflecting the unwinding of these effects and higher trade barriers, before strengthening to 2.8% in 2027, as uncertainty eases somewhat. Supported by continued, though moderating job creation, domestic demand, net of the most volatile multinational activities, is projected to grow by 3.7% in 2025, 2.3% in 2026 and 2.6% in 2027.

A binding domestic fiscal rule will be key to ensure sustainable public finances over the medium-term. Tax receipts are projected to rise but will remain vulnerable to sudden reversals, were additional tariffs to reduce large multinationals’ earnings. Enhancing SMEs’ access to innovation and technology-adoption support, together with eased restrictions in legal services, could strengthen productivity growth and reduce cost pressures on businesses.